"A Total Game Changer" - From Over-Population To De-Population

Strangely, the world is suffering from two seemingly opposite trends...overpopulation and depopulation in concert. The overpopulation is due to the increased longevity of elderly lifespans vs. depopulation of young populations due to collapsing birthrates. The depopulation is among most under 25yr old populations (except Africa) and among many under 45yr old populations.

So, the old are living decades longer than a generation ago but their adult children are having far fewer children. The economics of this is a complete game changer and is unlike any time previously in the history of mankind. None of the models ever accounted for a shrinking young population absent income, savings, or job opportunity vs. massive growth in the old with a vast majority reliant on government programs in their generally underfunded retirements (apart from a minority of retirees who are wildly "overfunded"). There are literally hundreds of reasons for the longer lifespans and lower birthrates...but that's for another day. This is simply a look at what is and what is likely to be absent a goal-seeked happy ending.

In a short yet economically valid manner, every person is a unit of consumption. The greater the number of people and the greater the purchasing power, the greater the growth in consumption. So, if one wanted to gauge economic growth, (growth in consumption driving economic growth), multiply the annual change in population by purchasing power (wages, savings) per capita. Regarding wage growth, I hold wages flat as from a consumption standpoint, wage growth is basically offset by inflation. Of course, there is another lever beyond this which central banks are feverishly torqueing; substituting the lower interest rates of ZIRP and NIRP to boost consumption from a flagging base of population growth. (There is one more boost to consumption, huge increases in social transfer payments primarily among the advanced economies...but while noted, these are a story for another day.)

THE DETAILS

The chart below is total annual population growth broken down by OECD nations (33 wealthiest nations...representing 1.3 billion people, OECD members), BRIICS (Brazil, Russia, India, Indonesia, China, S. Africa...representing 3.4 billion people), and the RoW (Rest of the World...representing about 3 billion people). Takeaways - 1) total annual population growth peaked in 1988 and has been decelerating since falling 13% & now down 12m/yr from peak. 2) Growth has been shifting away from the BRIICS to the RoW.

Below, global annual total population change vs. under 45 annual population change broken down by OECD, BRIICS, and the Rest of World. What should be clear...1) under 45 population growth has fallen by nearly 60% & is down 44m/yr from peak growth. 2) All under 45 population growth (net) is among the poorer nations of the Rest of the World. Growth has shifted from rich to middle to poor nations and from young to old. Those with little income, savings, and/or access to credit can't consume much. Elderly on fixed incomes, declining vitality, and credit averse won't consume much. Clearly, the impact of the slowing and shifting population growth on slowing growth of consumption should be easily understood.

Global annual population growth by GDP per capita. OECD nations given an average of $40k per capita, BRIICS $15k per capita, and the RoW $8k per capita (below). Annual growth in consumption peaked in 1989 and has been falling since...of course this is unadjusted for the big impact that credit has to increase real consumption.

Global annual under 45 population growth by GDP per capita further broken down by growth among OECD, BRIICS, & RoW (below). The deceleration of global GDP per capita is entirely among the under 45 OECD and BRIICS which have nearly entirely ceased. The only under 45 growth in consumption is among the decelerating RoW.

Below, 0-64yr/old annual global population growth vs. 0-64yr/old population growth among combined OECD, China, Brazil, and Russia vs global debt growth. The surge in debt since 1988 coinciding with the collapse of growth among the wealth OECD and aspiring BRIICS (growth has fallen from 30m/yr to 3m/yr (90% decline) and growth among the RoW has entirely stalled since '88 at +55m/yr. The central bank response to take interest rates to ZIRP (and now NIRP) has been an attempt to maintain consumption growth against declining population growth. Only central bankers know what they'll do as under 65yr/old populations begin outright shrinking nearly everywhere but Africa?!?

A look at annual global populations; young vs. old (below). The 0-5yr/old population has stalled but nowhere near so for the 75+yr/old population. In 1950 there were ten "babes" for every 75+yr/old...by 2050, the two groups are estimated to be 1:1 but this estimate is likely to be far too optimistic if economic conditions continue deteriorating.

US 20-59yr/old annual population growth vs. the Federal Reserves FFR (%) and US total debt (below). Federal Reserve actions have been and remain a simple (ultimately unwinnable) fight vs. the decelerating growth among the core US population since the early 1980's. The great recession of 2008-'09 shouldn't be a shocker given the sharp 20-59yr/old population growth deceleration culminating in '07.

Below, Japan's 20-59yr/old annual population growth vs. BOJ interest rate and Japanese federal debt. Japan's annual core population turned negative in '00 and interest rates hit ZIRP and debt creation took off. Japan's plan to monetize likely well in excess of 100% and maybe ultimately 1,000% or 10,000% of GDP is a curious solution which may lead to an eventual hiccup which leaves Japanese society in absolute chaos (2nd chart below). But if it were only Japan that had this plan...but alas, it is the same for all major central banks presently or eventually facing depopulation. (Debt in chart below is denominated in Yen, not dollars).

Below, Germany's 20-59yr/old annual population change vs. debt to GDP. Germany's 20-59yr/old population turned negative in '94 but the implementation of the Euro and Euro wide market (with the Maastrich treaty in 1992 and implementation Euro area wide in 1999) quintupled Germany's available export base under a now common currency (2nd chart below). The impact was a stay of execution for Germany but a grinding, terminal cancer for the remainder of the Euro area.

Below, China's annual 20-59yr/old population change, Bank of China interest rates, and China total debt growth. Annual Chinese core population growth has collapsed since '08 by 90% and will turn negative in 2018 and remain increasingly negative for decades thereafter. The insane Chinese debt ramp to offset the declining population growth has no possible means to resolve in any manner but catastrophe.

***Noteworthy, despite China's recent elimination of it's "one child policy", it should be noted that China's birthrates are higher than Japan, S. Korea, Taiwan, and many EU nations...none of whom have any policies restricting births and most with policies to encourage higher fertility. The elimination of the "one child" policy in China is unlikely to have significant impact...family finances and struggling economies are far more likely to determine family formation in China and world-over.***

CONCLUSION

An economic and financial system premised on perpetual growth was bound to run into trouble (what do you do when you have taken a wrong turn?...apparently just keep going!). The inevitable deceleration of population growth was the trigger that turned central bankers into pushers offering ever cheaper credit. The lower rates drove unsustainable rates of consumption absent even further rate cuts and likewise drove overcapacity which likewise needed even lower rates. But negative rates of NIRP are simply no longer under the heading of capitalism (a market that doesn't value capital likely isn't capitalism?!?). When we've clearly changed "ism's"...we've crossed the Rubicon.

What happens as population growth turns to population decline is honestly and literally a complete and total game changer. A flat to declining number of buyers and consumers opposite ramping elderly sellers plus their unfunded liabilities is a problem with no happy resolutions. Currencies (what will constitute "money"), "free-markets", and perhaps the basis of civilization hang in the balance of the transition from high population growth to potential outright depopulation.

I believe this is the correct lens through which to view and understand why growth is perpetually weakening, why commodity overcapacity and slowing demand will only accelerate, why the Treasury market continues to see "buying" despite the near total absence of buyers (Treasury Mystery), why equities are a "buy" (but for all the wrong reasons), and why precious metal valuations are so extremely suspect in the face of a monetary onslaught.

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Good thing people stopped mating because they told us we'd be out of food by 1970.And kinda associated, if I can have a black president in my White House, why can't I have a black lawn jockey at my house?

Excellent article on a subject that 99% of economist, planners and business people don't get - at all. Your generalites are correct within your economic considereatijons (a fiscal collapse as opposed to a physical economic collapse). Only criticisms:

1. You might want to update your population data. Population growth has been increasing in recent years and as usual well ahead of UN predicted population declines which in general steepen and shorten the affect curves you generated.

2. If you write additional articles on this subject you might want to also look at them through the lens of critical resource depletion and dilution - physical economics. I would suggest that you first consider that 95% of the human population is now dependent on the economic (scale) interdependencies of petroleum, petro-chemicals, and rock phosphates through food production fertilizers(NPK) and management chemicals. Currently there are no alternative energy sources that replace petroleum without affecting petro-chemical and NPK food production economics. Nothing says "global chaos" quite like a major change in food costs to the masses.

3. The only thing that will significantly delay a human species critical resource depletion and dilution collapse would be the development of a near "free" energy source to replace petroleum and that would change the basic economics of recycling phosphoorus and many other resources. Unfortunately, any "free" energy is equally likely to encourage another human population bloom that would seriously shorten the time to critical ecosystem collapses in the oceans and turn the planet into a very boring one - occuppied by humans, algae and bacteria.

4. Of course all of the three prior consideratiosn assume that the Chinese won't have another critical resource panic and create a rapid human depopulation with a selective or even unselective bioweapon that would allow their greater population to dominate survivors and repopulate the world with Chinese.

The way I see it - half the reason we have so many people is because we're able to and half because rulers made the decision we had to. They industrialists needed more workers, so they pushed the governments to subsidize child birth, build schools, offer family services etc.

The money expansion craze became the enabler for overpopulation. The bankers overprinted cash, politicians overpromised jobs and citizens over-fucked. Along the way they overspent, making themselves economically irrelevant.

Technically the only people who are now vanishing are ones that shouldn't have been born in the frist place.

Actually all birth rates are declining. I mean they can try to breed all they want, but human fertility has been compromised by a thousand different environmental insults. You can have your iPhone or you can have sperm, but you can't have both....

Krungle is 100% correct. The birth-wealth substitition effect is pretty well proven in family and development economics. The past 40 years have been largely a story of taking subsistence economies or soviet planning (subsistence) into the 21st c. As we are running out of countries to industralize we are hitting the limits of inifite growth. The problem is that the last time we hit the end of the road, we had a sudden drop in crop productivity and defaults around 1470. That required about 300 years to clear up, of which over 80% of europe lost their wealth and lives.

imo most of it is dependable birth control and better education and jobs for women thus separating sex from childbearing and allowing women some freedom from dependence on men.

the transition to a declining population of proportional age groups through the demise of the last of the baby boom will be difficult. but once they are all dead (and that includes all similar cohorts in other countries which share their propeties of predating women getting access to dependable birth control, education and jobs sufficient for independence), the lives of these smaller generations should be better, as should the earth on which they live.

perhaps not as well off will be those waitin to be paid all the compounded interest on all the accumulated debt or all the growing dividends on equity shares priced on expectations of endlessly accellerating corporate profits.

If all these hypothesises are correct, there is a huge bubble of old people that will need looking after (or exterminating). The law of unintended consequences is a bitch. The system is rigged at every turn. There is no positive outcome unless some kind of comfortable tidy form of euthanasia is offered for those who have little to live for. Whatever anyone says, this paradigm isn't going to end happily for 90%. Just follow-on the time-line.

imo there is no doubt that euthanasia is coming. much of it would be welcome. i certainly would prefer a clean, easy suicide to dying slowly in diapers with my mind gone.

but that is a tiny blip on the timeline, for the u.s. perhaps thirty or forty years; the earliest boomers are already dying in considerable numbers; they are my classmates.

when that is over, the remaining human population probably doesn't have the same overly old population to deal with again because the great shift from women as breeders under men's thumb to independent people has occurred. even war seems likely to reduce populations proportionately or even be toughest on the very young and very old.

it would seem that such a world with a slowly declining human population would tilt the table in favor of labor and against capital (see my post above) in a way even greater than the black plague. and the bonus: there is no cure. the population does not recover.

There's a reason for that: it's bloody difficult to produce food without them. I plant double what I need, but seldom get sufficient from a crop. If my livelihood depended on it, my produce would glow in the dark. It's all about price, and subsidies. We pay far too little for food, but far too much for stuff like housing.

Queue all the hobby gardeners who will now tell me I am incompetent and / or lazy, as they can feed the world for free (except they never do....)

If it wasn't for the green 'pesticide, herbicide, insecticide' revolution they would have been right. Factory farming and the use of these products enabled people to eat on a scale unprecedented in history. But bankruptcies of trucking and agri-business will solve some of that for sure.

This is one area where I agree with the elites, there are too many retards out there. Time to thin the heards - I mean the Darwinists belive in survivial of the fittest anyway, let's find out who's strongest.

Yea, I agree but the mob mentality, that the elites created, in America scares the shit out of me. Need to make it a bit more fair for us critical thinkers. The elites will get thiers in the end as well, so I'm not too worried about them, the SNAP card people and the ones programmed to be obessed with Tech and smart phones are the real scarey ones to me.

The elites actually WANT the retards. They are so much easier to control. Tell them you love them, then pay them clownbux to help steal from the enemies of the elites. After establishing a world financial dictatorship, throw the retards under the bus. Pay them clownbux to fight each other.

This plan of yours isn't diabolical enough. It needs to be creeping survival of the fittest. Let us start by simply removing warning labels from shit that is so obviously dangerous that you'd have to either be trying to kill yourself with it, or you'd have to be a complete and utter retard. (You mean drinking hydrofluoric acid is BAD FOR ME?!) From then, we can move on to other rules, like seat belts, riding in the back of a pick-up, etc... Then we move onto allowing street fights between two consenting parties, and move it up onto allowing dueling. From there, the sky is the limit.

Are you discounting the value of adaptability for survival? You better adapt, or the world will chip away until all that remains are a few sun bleached bones but perhaps that is what you seek. What with all your killing rhetoric it would be the logical path for you to go down.

"This is one area where I agree with the elites, there are too many retards out there. Time to thin the heards - I mean the Darwinists belive in survivial of the fittest anyway, let's find out who's strongest."

To the elites, you are the retard. Don't you see that you agreeing with them is in fact exactly what makes them capable of what they do? To any who say there are too many people, I say otherwise, it is simply you who have chosen to live around too many of them. If you don't like it then you do have the option of moving to a more remote area.

I live in a major metropolitan city, and it's torture at times, becasue there are so many people. But these are the folks who make the world go around and the concept that there should be a thinning of the herd is entirely sociopathic.

By the way, all of the people who think they're smarter and better than everyone else, good luck if the masses ever truly do revolt. You may find you are not the SOF badass you think you are in your head.

All >80, terminally ill, serious genetic defects (inherited diseases), sub-80 IQ, the violent, criminally insane, chronic criminals (regardless of 'collar'). After that, target those who are unable or unwilling to reproduce in a classic Family setting.

You'd be doing Nature's, if you eliminated the high-energy, hi-tech, modern medicine veneer of society. It is especially Modern Medicine and Modern Farming, that is enabling the birth rates to be exploding in the 3rd world.

What are you, some kind of weird nihilist? How about they start with your Pop, then your neighbor, then... Well, if your post is the extent of your problem solving skills, you too will be on the "List".